Grand bargain: Senators working on deal for tax and entitlement reform?
posted at 4:13 pm on February 17, 2011 by Allahpundit
Can’t tell if this this is the same grand bargain alluded to recently by the New York Review of Books or something new and independent. The NYRB claimed that the White House was working with the Republican leadership on a package whereas today’s Journal piece says a deal’s being brokered by a nucleus of senators including Durbin, Coburn, and Kent Conrad. (Supposedly, more than 40 senators in all have “shown some interest.”) Durbin and Coburn are pals with Obama, though, and all three are refugees from his Deficit Commission, so maybe O is providing input through them while keeping his fingerprints off the negotiations. Remember, given a choice between boldly confronting the domestic challenge of our time and hiding under his desk to make next year’s campaign easier, The One’s preference couldn’t be clearer.
But if this thing starts to build momentum, that’ll have to change, won’t it?
The plan would break the task of deficit reduction into four pieces: a tax code overhaul; discretionary spending cuts; changes to Medicare, Medicaid and other entitlements; and changes to Social Security, aides said. The Social Security system is on firmer financial footing than other major entitlement programs and raises political sensitivities that lawmakers want to deal with separately…
The tax-writing committees would be given two years to overhaul both the individual and corporate tax codes, with general instructions to close tax breaks and minimize or eliminate tax deductions while lowering tax rates. The committees would be given a target for additional revenues to be raised by the new code. The deficit commission’s version of tax reform would net $180 billion in additional revenues over 10 years.
If Congress failed to enact the tax code overhaul, the legislation would mandate an across-the-board tightening of tax deductions to meet the higher target.
Changes to Medicare, Medicaid and other entitlements such as agriculture subsidies and military and civil service retirement plans would also have to meet fixed targets. Social Security, however, would not incur automatic penalties if lawmakers failed to make changes.
If the Social Security effort failed, the deficit commission’s plan—a mix of raising the level of wages subject to Social Security taxes, slowly increasing the retirement age and other smaller changes—would go to Congress for an up-or-down vote. But there appears to be little appetite for automatic cuts if neither option were to pass.
This is, in other words, not so much a grand bargain to actually enact reforms as it is a legislative framework of “triggers” to force Congress to move ahead with separate reform legislation. If they refuse to rewrite the tax code, poof — a whole bunch of deductions are automatically reduced/eliminated. If they refuse to deal with Social Security, bam — a vote on the Bowles/Simpson deficit reduction plan comes to the floor, where it’ll surely fail but would at least make some people squirm. That Congress is looking for ways to force itself to take up these extremely important matters instead of just going ahead and taking them up tells you everything you need to know about American political leadership right now. (Even Boehner, who’s been admirably bold this week about the sacrifices inherent in spending cuts, is still taking a go-slow “adult conversation” approach on entitlements.) In fact, if the boldfaced number in the blockquote is accurate, this plan will be D.O.A. on the left: $180 billion in new tax revenue over 10 years is nothing, and they’re not going to settle for nothing when deep cuts are coming practically everywhere else. TNR thinks the Journal’s reporting here is simply wrong and that the $180 billion figure will be new tax revenue in year ten alone. Probably correct; over 10 years, that number is a pittance.
Incidentally, Schumer’s already insisting that Social Security (a less imminent threat than Medicare) be removed from the deal, which is (a) predictable insofar as it lowers the political cost of the bargain for the left especially, and (b) insane insofar as it makes sense to do as much as we can right now if, miraculously, the political will to deal seriously with entitlements finally emerges in Congress. I’m skeptical that it will — centrist Republicans are already bugging out and voting with Democrats on relatively minor GOP spending cut proposals — but between the Dems’ own pollsters warning them that the public’s ready to tackle the deficit and mind-boggling news stories like this alerting readers to what Obamanomics means in practice, they’re under some pressure. Maybe they’ll cave. Even an eeyoreblogger can have hope, my friends.
Speaking of mind-boggling Obamanomics, via RCP, here’s TurboTax Tim helpfully informing Jeff Sessions that, yes indeed, Obama’s budget is unsustainable. Exit question: If Congress is now all about passing frameworks that force it to deal responsibly with spending, how about adding a Balanced Budget Amendment to the mix?
Breaking on Hot Air